I’d like to express my gratitude to each of you. Your choice to be a Netflix member helps us get more content every year, and helps us further improve our member experience. You make it possible for us to offer the most amazing internet television experience ever. Thank you, again. -Reed

When I started writing about Netflix in November, 2003, Netflix has only a few million subscribers. I never thought that Netflix would grow into one of the largest subscription services in the world.

It seems like every month or so there is a rumor about Amazon, Apple, or Microsoft buying Netflix, but the timing of this one is interesting. Netflix CEO Reed Hastings recently resigned from the Microsoft board, and the increasing war for content between Apple, Google, Amazon and Microsoft would make Netflix a strategic asset for any of these companies.

While competition has increased, the company still has an iconic brand in streaming video and widespread distribution on almost every conceivable computer and consumer electronics platform: smartphones, tablets, PCs, TVs, Blu-Ray players, blenders. (OK, no blenders.) Microsoft has almost $69 billion in cash and investments. The company could pay 2x the current market cap, and still use less than 10% of the cash. (Although I would point out that a large chunk of that cash is outside the country, and basically inaccessible for U.S. acquisitions.)

Meanwhile, buying Netflix would be in keeping with Microsoft’s revamped philosophy on the Xbox 360, which treats the device more like an entertainment device and less like a video game console. I’d note that Microsoft has a track record here on shopping for Web brands: They paid $8.5 billion for Skype; and of course they tried in vain to buy Yahoo a few years back for an ungodly sum.

I'm wondering if Microsoft would buy Netflix to remove the Netflix service (or limit the features or selection) from Sony, Apple or Google devices to help move people to Microsoft computers, tablets, and phones.

I didn't watch the Emmy's this year and I missed some important news -- Netflix won a technical Emmy award. Neil Hunt, Chief Product Officer, said: “Thanks very much to the Academy for recognizing Netflix - on behalf of all the people here who have worked so hard to create a great service that is revolutionizing television!”

Netflix Technical Emmy Award: Program NotesToday, more than 30 million members regularly access the Netflix streaming service, using more than 1000 types of consumer electronic devices, viewing over 1 billion hours of TV shows and movies each month, and accounting for more than 30% of US “last-mile” Internet traffic on any given night.

Netflix users are in control. They choose what, when, and where to watch. They pause, resume, or choose something else, any time (and there are no ads to skip). They watch on TV, tablets, computers, or mobile phones. At home, on vacation, or while on the road.

The Netflix cloud infrastructure, cloud-based video encoding and encryption, cloud-based bookmarking, multiple-profile stream encryption, "Open Connect" content delivery network, adaptive streaming technology, dynamic app updates, and personalization technologies deliver the service at scale with 99.99% availability. The major patent portfolio that Netflix has developed, combined with the scale of service delivery, widespread market use of the services and the validation of an alternative business model for television distribution is changing the Television industry in fundamental ways.

TechCrunch reports that HBO has delayed plans to launch a stand-alone streaming service in Norway, just after Netflix launched in Finland, Norway, Sweden and Denmark. This will be the first battleground for Netflix and HBO, but HBO Nordic CEO Herve Payan announced a delay in the launch:

“The launch of the HBO Nordic network and streaming service is highly anticipated and will be deserving of HBO’s high-quality reputation. We have been in contact with and are listening to our significant local fan base. Slightly pushing back the launch is not tied to one specific reason but simply our desire to meet all expectations. This has been communicated directly to those awaiting HBO Nordic and we have gotten nothing less than an enthusiastic response.”

How much would you pay for a stand-alone streaming service from HBO? When do you think they'll launch in the USA?

Reader John sent in a story from the Views & News in Norway site that says the state may fine Netflix over the terms of use:

The US-based film and TV streaming system Netflix is now available for use in Norway and seems well-received except in one important area: Its rules of use demand Norwegian consumers to give up their consumer rights in Norway, and that’s viewed as illegal.State regulators called the rules “unreasonable” and threatened it’s likely any attempted enforcement of them by Netflix would be struck down in a Norwegian court. In the meantime, Netflix may get hit with a ban on enforcing their rules of use and a fine “if they don’t change them,” Petter Ravne Bugten of the state consumer ombudsman’s office told newspaper Aftenposten.

Everyone has the best intentions when building software. Good developers and architects think about error handling, corner cases, and building resilient systems. However, thinking about them isn’t enough. To ensure resiliency on an ongoing basis, you need to alway test your system’s capabilities and its ability to handle rare events. That’s why we built the Simian Army: Chaos Monkey to test resilience to instance failure, Latency Monkey to test resilience to network and service degradation, and Chaos Gorilla to test resilience to zone outage. A future improvement we want to make is expanding the Chaos Gorilla to make zone evacuation a one-click operation, making the decision even easier. Once we build up our muscles further, we want to introduce Chaos Kong to test resilience to a complete regional outage.

It's great to see Netflix sharing how they are building a high availability service on AWS.

Global revenue was $905 million, with domestic streaming bringing in $556 million, international at $78 million, and VD at $271 million. Netflix ended the quarter with a modest $8 million in profit (13 cents per share).

For Q4 Netflix is forecasting 26.4 to 27.1 million domestic and 5.2 to 5.9 million internations streaming customers (paid and trial subs), and possible a loss of $13 million to a possible profit of $2 million in income. DVD subs will continue to decline to 7.85 to 8.15 million subs, but will contribute $117 to $129 million in profit, offsetting international losses of $119 to 107 million.

In a letter to shareholders Netflix cites two metrics to gauge increased customer satisfaction: "We increased our per member viewing
in Q3 by more than 30% (year over year) to record highs by improving our content and member
experience; and our voluntary churn is generally the lowest it has ever been.1 In contrast, involuntary
churn has been increasing as we grow more mainstream and attract more lower-income households."

TV is huge for Netflix, and they note that 6 of the top 10 TV shows are exclusive to Netflix, and the rate is slightly higher for the top 50.

Netflix published a chart to show that streaming obligations have stabilized:

Netflix is competing in the recently launched Nordic countries directly with HBO, and it'll be a battle everyone will be watching closely, as Hastings believes that HBO will eventually unbundle HBO GO in the USA and compete directly with Netflix.

Interesting stats from Q3: Netflix streamed 3 billion hours of movies and TV shows and there are now more than 800 Netflix-ready devices.